The Federal Circuit clarifies IPR estoppel and overturns a $1.1 billion verdict in Caltech’s favor due to improper damages theory


  • IPR estoppel applies to claims and grounds for invalidity in both the asserted petition and those that the petitioner could reasonably have asserted in its IPR petition.
  • Petitioners cannot cite prior art references for invalidity challenges in district court if they know when the IPR petition is filed but do not include them.
  • To sustain damages theories that differ from the usual single license at a single fee, the evidence must show that accused infringers would have had separate agreements for an accused product at different levels in the supply chain.

The Federal Circuit clarified on February 4, 2022, that IPR estoppel applies to all claims and invalidity grounds that the petitioner may have plausibly asserted in its IPR petition. The court also overturned and remanded Caltech’s $1.1 billion patent infringement judgment against Apple and Broadcom because Caltech adopted an incorrect damages approach. 20-2222 California Institute of Technology v. Broadcom Ltd et al. (Fed. Cir. 2022).

Caltech claimed that Apple and Broadcom violated three patents-in-suit. Two patents claimed circuits that create and receive irregular repeat and accumulate codes, which improve data transmission speed and reliability. One patent claimed a technique for producing code words that infringed on all of the asserted claims of the patents-in-suit and were awarded for having information bits appear in a variable number of subsets. The jury determined Apple and Broadcom to have infringed and awarded Caltech $270,241,171 from Broadcom and $837,801,178 from Apple, totaling $1.1 billion. The district court also issued several decisions on IPR estoppel and other matters.

The federal circuit upheld the district court’s decision to broaden the scope of IPR estoppel to include all claims and grounds asserted in a PTAB petition, those instituted by the board, and those that could have been included in the IPR petition but were not. This clarification followed the Supreme Court’s ruling in SAS Institute v. Iancu, 13 S. Ct. 1348 (2018), which reversed the previous precedent. Because Apple and Broadcom were aware of certain prior art references and invalidity challenges when they submitted the PTAB applications but did not specify such grounds in the petitions, they were barred from bringing such arguments in district court.

Regarding damages, Caltech’s experts stated at trial that the company would have participated in two separate, yet concurrent, negotiations: the first at the “chip level” with Broadcom and the second at the “device level” with Apple. Because they were independent infringers at different stages of the supply chain, Broadcom and Apple would have conducted these negotiations individually. Broadcom, in particular, designed and sold the infringing computer chips to Apple, which Apple then installed in its devices. On the other hand, the federal court determined that there was insufficient evidence to demonstrate that Apple and Broadcom would have negotiated in this fashion rather than negotiating a single license at a single rate for the infringing chips.

In conclusion, suspected infringers should proceed with prudence before launching an IPR petition. Otherwise, plausible invalidity grounds raised later in the litigation for strategic reasons will be prohibited. Furthermore, substantial due diligence is required before enforcing or invalidating patents, whether a university is a patent owner or an accused infringement. Failure to do so may force colleges to replicate Caltech’s blunders or give up arguments that affect the case’s merits. To support damages theories, colleges should investigate corporations’ past behavior and the history of talks between partners at various supply chain stages, if possible. A two-tier damages argument is more likely to succeed if there is evidence that corporations would have separate talks at different supply chain stages. However, according to general patent law rules, damages computations should be based on a single hypothetical agreement between all parties at a single royalty rate.